For the year 2019 the Pakistani cement industry remain under pressure and this trend is likely to continue in 2020 as we are currently on the stage of poor demand, higher coal prices and interest rates whilst compared to overseas markets.
Reviewing the industry performance, experts observed in the local media that the industry started making expansion plans soon after the then-government signed CPEC agreements.
As expansions came through, price competition grew, which led to lower retention prices in many northern markets and to a great extent, volatility in others. In addition, there was a contraction in exports.
Furthermore, as the industry entered FY19, energy prices were higher while the Pakistani rupee also took a nose dive. It lost nearly 34 per cent of its value against the dollar and this resulted in more expensive imported inputs, including coal.
Domestic cement demand slowed during FY19 as government spending dried up and private sector development halted due to regulatory crackdown.
Experts were of the view that if industry is able explore the overseas markets more, revenues would continue to grow, but margins may not improve as cost pressures coupled with price competition both locally and globally may affect the profitability.